You Can Realize the Same Value as That Derived from Stock

question 19

Multiple Choice

You can realize the same value as that derived from stock ownership if you:

• A)sell a put option and invest at the risk-free rate of return.
• B)buy a call option and write a put option on a stock and also borrow funds at the risk-free rate.
• C)sell a put,buy a call,and buy a zero-coupon bond.
• D)lend out funds at the risk-free rate of return and sell a put option on the stock.
• E)borrow funds at the risk-free rate of return and invest the proceeds in equivalent amounts of put and call options.

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Definitions:

Concentration Ratios

A measure of the market share controlled by a certain number of the largest companies in an industry, indicating the level of market concentration.

Technologically Progressive

Describes a society or company advancing through the adoption or development of new technologies, leading to increased efficiency and innovation.

Creative Destruction

A concept in economic theory that refers to the process by which new innovation leads to the demise of existing structures and creates new opportunities.

Dominant Firms

Firms that have a major share of the market sales in a particular industry, giving them the power to influence the market's total output and price levels.